IOTA has two aspects. It is both a platform and a token. IOTA can be considered as a distributed ledger that helps maintain a record of transactions between machines and the Internet of Things, and also execute the transactions. It serves as a platform or an open market that allows services and process to be shared amongst devices that are connected to the Internet of Things. The IOTA cryptocurrency helps the devices to make payments for the transactions that are being performed within the IOTA platform. So, it can be considered as a token more than a cryptocurrency.
The Blockchain is the technology used by Bitcoin and most other cryptocurrencies. But when it comes to IOTA, it uses a new technology called the Tangle, which can be considered as an updated version of the blockchain. As the name suggests, there are no blocks in Tangle. It is a Direct Acyclic Graph (DAC), which can be loosely translated as Web. So, blockchain is made of blocks and tangle is a web in the basic data structure. This structure itself brings significant changes in the rate of TPS, transaction fee and so on. Tangle can be considered an advancement from blockchain, which can help IOTA gain more user base.
Tangle vs Blockchain
The main issues faced by blockchain were the scaling problem, low speed, and transaction fees. All these problems are easily solved by the usage of Tangle. The scaling problem in blockchain arises because the miners have more preference for larger blocks that can ensure them higher rewards. By doing so, the number of pending transactions increases and in turn decreases the speed of every transaction. In tangle, every transaction is given equal value and the need for miners are completely eliminated. The user can carry out his transaction by verifying two transactions of the other user. This way, many transactions are handled at once, and the services are made completely free. The TPS is also very high in IOTA. The platform recently conducted a Bug Bounty event as an opportunity for the users to earn IOTA coins by finding the bugs in the system.
Applications and scope of IOTA
The prime application of IOTA is to provide a platform for machines to interact with the Internet of Things. When we use our devices such as laptops and mobile phones, we mainly utilize it for browsing and other not-so-heavy activities. So, there is a lot of unused power left in these gadgets, and this can be utilized and shared, between other devices and the Internet of Things. We can buy IOTA coins in places like Bitfinex exchange and store it in wallets such as Ledger, Nostalgia wallet and GUI Light wallets. Each of these wallets has their own pros and cons. One can invest in these wallets according to the nature of the wallet and nature of the devices used.